5 Ways to Restore Confidence in Technology for Capital Markets' CTOs

In the wake of recent technology glitches, Greenline's President Josh Tolman sets priorities for chief technology officers to safeguard their systems and avoid future breakdowns.

Recent headlines are rife with technology glitches that have undermined market confidence and left exchanges and corporations with significant losses. Software errors have cost brokers millions of dollars and left behind damaged balance sheets. Exchanges are forced to earmark millions of their own revenues to reimburse brokers and investors. Even IPOs have been adversely affected.

It is little wonder that regulators, legislators, market participants, and the boards of these same companies are searching for ways to safeguard against future (but inevitable) breakdowns. Chief technology officers are called on to deliver reliable financial technology solutions that will support market integrity, provide excellent customer service, and mitigate risk. At the same time, stakeholders demand that businesses manage costs more closely and deliver profits - all when global trading volumes are spotty across all asset classes.

These are big, complex challenges that put more pressure than ever on chief technology officers to target the most efficient technology solutions to meet these conflicting needs. When grappling with this complicated picture with competing interests, it helps to keep in mind five priorities:

1) Quality is King – Firms are wary of causing major market disruption due to a technical error. Errors such as system outages, faulty or aberrant application behavior, and message failures can result in incomplete transactions, potentially driving customers away from transacting on your trading system. Customers want to know they are receiving consistent, reliable, and seamless service, and to be assured that appropriate safeguards are in place so that their trading flow won't be compromised.

2) Always be testing – A defined and consistent commitment to testing is critical in today's complex environment. Automation is a necessary component of any advanced testing strategy. Effective automation can run through a wide variety of functional and performance scenarios. These tests can be run at any time during the development and testing phases, such as when moving a software release into the production environment. This type of scenario testing helps strike a balance between quickly bringing global trading systems to market and mitigating against the multiple types of outages that we have seen in recent months.

3) Speed to market wins – There is pressure to launch new or updated software quickly. However it is difficult to responsibly move fast enough without the quality and efficiency of automated testing. Testing against multiple simulated environments to verify how systems perform in complex scenarios ensures quality and performance across multiple trading components. By shrinking the deployment timeframes, technology teams can more quickly adjust to market and customer needs allowing the overall organization to grow is business and volume.

4) Mitigate the issue before it becomes one – Even the best tested systems will have issues; after all no technology can be perfect. However every minute spent working through technical issues results in lost trades due to suspended service. For some firms, this could mean millions in lost revenue and an even greater uphill battle to restore confidence. Monitoring can provide intelligent, proactive analysis to help quickly address the issue and communicate the resolution back to customers. Identifying failures and events at appropriate thresholds allows technology organizations to adequately triage and mitigate problems and provide solutions back to customers. Based on the solution, feedback can be incorporated into the quality assurance stage of the development life cycle to prevent future errors. Best practices have proven that testing and monitoring are a cycle that should be repeated to ensure the highest quality technology.

5) Use industry best practices for continuous improvement – Most firms are experts of their own systems and processes. But it takes an independent partner to provide deep expertise and industry-vetted best practices to dramatically improve testing and monitoring capabilities. The breadth of knowledge within the industry provides the broadest repository of trading technology expertise. Regularly augmenting current practices with industry best practices will lead to continuous improvement and increased operational efficiencies.

The trading technology traumas of the last year have made one thing abundantly clear: exchanges and trading firms put their reputation on the line virtually every second of every day. To meet the competing demands of doing more with less, it is paramount for trading technology executives to consider the core automation elements needed to reduce risk and help maintain the confidence of the marketplace and of their own companies.

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